Energy Market Outlook
Keisuke Sadamori, Director Energy Markets and Security
IEEJ Seminar, 3 February 2023

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Oil prices have eased as market shifted to surplus
World oil demand, supply and stock changes

Balance could quickly tighten. Chinese demand recovery and the extent of Russian supply losses remain
biggest wild cards for 2023.
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Russian oil exports remain robust but revenues see sharp fall
925

876543220

Bn USDmb/dRussian oil exports and revenues

151051002021 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22avg
EU crude oil
EU products
UK+USTürkiye
China
Sources: IEA, Argus, Kpler
India
OECD Asia
Other/unknown
Total Revenue

In December, the EU accounted for 27% of Russian exports, down from 49% pre-war. India, China,Turkey largest markets. From 5 February, Russia needs to divert 1.2 mb/d of oil products from EU.
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Gas prices dropped from their peak in August but still show strong volatilityEvolution of key regional natural gas prices since mid-2021

Evolution since 1 July 2021 (100)1000900
800
7006005004003002001000Jul-21

Oct-21

Jan-22
Spot LNG (Asia)

Apr-22
TTF (Europe)

Jul-22Oct-22

Jan-23

Henry Hub (North America)

Prices in Europe and Asia declined from their all-time records of late August on a combination of mildtemperatures and high storage inventories.
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Europe’s incremental gas needs drove LNG growth and tightness
Global LNG balance, y-o-y change, 2021-2022

Global LNG trade flows reconfigured in 2022 as Europe’s incremental LNG needs account for over twice
the amount of supply capacity additions.
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Immediate action is needed to avoid a gas shortfall in 2023
Expected changes and additional actions to close the supply-demand gap in the European Union in 2023

There is a need for immediate actions to close a 27 bcm supply-demand gap, with enhanced energy
efficiency, faster deployment of renewables & heat pumps, behavioural changes and supply measures.
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Coal demand is likely to reach a new all-time global high in 2022

Mt

Changes in coal consumption by region, 2020-2025
8 300
8 200
8 100
8 000

8 025

8 038

2022
European Union

2025
Southeast Asia

7 929

7 900
7 800
7 700
7 600
7 500

7 511

7 4002020 2021
United States

Rest of world

China

India

Global coal consumption will reach a new all-time high in 2022 although growing only by 1% from 2021.
Consumption will plateau afterwards through 2025.
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Coal and gas power generation still needs to cover residual load
Gas price markers, 2020-2025

3 000

USD/MBtuTWh

Additional global power demand and generation by source, 2021-2025

159

2 500
2 000

605040

1 500
2 497

-113

1 000
500

70828

30
20720

10175

02021-2022

Additional power demand

2 255

Renewables

02020 2021 2022 2023 2024 2025

2022-2025

Nuclear and others

CoalGas

TTF

Henry Hub

Weak nuclear and high gas prices pushed up coal power generation in 2022. Renewables cover the majority ofadditional electricity demand but leave some limited room for coal and gas growth.
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Renewable capacity additions accelerate during the crisis
EU renewable electricity generation change 2022 vs 2021

40080TWhGW

Renewable capacity annual additions, 2015-2022
350
3006040250
200201502015 2016 2017 2018 2019 2020 2021 2022
China
India
Sub-Saharan Africa

European Union
BrazilASEAN

United States
MENA
Other countries-40-60

Other renewables

0Hydropower-20Wind50

Solar PV

0100

Global capacity additions to jump by 25% driven by acceleration in China, EU, India & Brazil driven by policies. Rapid
growth of wind and PV in the EU can potentially reduce 12-13 bcm of natural gas this year despite severe droughts
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Peak fossil fuel demand is coming this decade
Fossil fuel demand in the Stated Policies Scenario, 1900-2050
600
EJHistorical

Projected450

Oil

Oil

300

Coal

Coal

150

Natural gas
1900

1950

Natural gas

2000

2050

Today’s policy settings are now sufficiently strong that they produce a distinct peak in fossil fuel use before 2030
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Russia faces a much-diminished role in international energy
Russian oil and gas exports in the Stated Policies Scenario
Oil exports

Gas exports

9375mb/dWEO
2021
2022

bcm
WEO
2021
2022
6250

3125

2010

2015

2020

2025

2030

2010

2015

2020

2025

2030

Russia’s share of global oil and gas trade halves by 2030, with exports from the United States, Middle East,
South America and East Africa – and enhanced efforts to reduce demand – filling the gap
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Keeping the door to 1.5 °C open
Global energy related CO2 emissions
50

Pre-Parisbaseline

Gt CO240

StatedPolicies
Scenario

30

20

Announced
Pledges
Scenario

10Net ZeroEmissions by2050 Scenario
1990

2000

2010

2021

2030

2050

Policy and technology progress since 2015 has shaved 1 °C off projected warming, a step in the right direction;
but much more needs to be done in order to avoid severe climate disruptions
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IEA 2022. All rights reserved.